In today’s economy, the road to retirement is more like the road to recovery. Retirement plans have lost some $4 trillion in the past 15 months. Foreclosures are at a record high and the stock market has seen the worst declines in 8 decades. However, as John F. Kennedy said, “In a crisis, be aware of the danger, but recognize the opportunity.”

Ironically, the opportunity for advisors in the current environment is an unfortunate consequence of the financial crisis: layoffs. The nation has lost 5.7 million jobs since we slipped into a recession in December 2007. For advisors, that means 5.7 million potential rollover opportunities.

While the opportunity for rollover business is big, the competition has gotten even bigger, due primarily to a changing regulatory landscape. The much-discussed 2006 Pension Protection Act gave record keepers the ability to provide automated solutions. For years, record keepers have been concerned about assuming too much fiduciary responsibility and were hesitant to offer automated tools and advice. However, this is no longer the case. Record keepers are retaining the assets that would have rolled over in the past. And with trillions of dollars in motion, they are competing head-on with advisors.

Now is the time to put yourself in position to capture rollovers. Go to the source by working with investors while they’re still employed and accumulating assets in their individual 401(k)s. In a 2008 Gallop Poll, 54% of those surveyed said 401(k)s are a major source of their retirement plans, and most of those respondents said they intend to rely almost exclusively on those funds for retirement. You may not profit from your efforts in the short term, but you can build and maintain key relationships through individual 401(k) management that will pay off in this market.

401(k)s on life support

It appears that 401(k) plans are in need of major surgery. In fact, the average 401(k) is down in value nearly 30% in the last year. And 20% of those who need to step up retirement contributions–workers age 45-plus–have actually stopped contributing.

While 401(k) plans have recently come under fire from politicians and scholars calling for reform, there were problems with these retirement plans long before the current crisis. It is important to note, however, that many of the problems did not originate with the plans, but with investors.

The dramatic switch from defined benefit to defined contribution has characterized a new generation of investors who are undisciplined, uneducated and greatly in need of professional advice. Participants in 401(k) plans make many mistakes, but they generally fall into 5 main categories:

? Participation

? Portability

? Loans

? Investment Errors

? Education

Participation: Scheduling a check-up

Let’s face it: Too many Americans are not participating in their companies’ retirement plans. Research indicates that only half of America’s workforce participates in an employer-sponsored retirement plan, while just 10% max out their contributions.

A guiding principle of the 2006 Pension Protection Act was to help combat poor participation rates. As a result, many companies have established automatic enrollment plans, in which employees are automatically enrolled in their plan unless they “opt out.” Employees who are automatically enrolled sometimes rely too heavily on the company default allocation, which is typically too conservative to generate an adequate retirement nest egg. In fact, employees who enroll under an automatic enrollment plan tend to remain at the default allocation nearly 75% of the time. Even those who proactively enroll in their 401(k) plans often fail to revisit the plan or regularly update allocations.

Portability syndrome: cashing out too soon

In theory, portability is a “win-win” situation because it lets employees take their nest eggs with them when they change jobs. The average working individual changes employers from 5 to 8 times during his or her career. This presents multiple rollover opportunities, especially for advisors who have already advised individual clients on their 401(k)s. Without proper 401(k) management, undisciplined investors will most likely cash out. And a whopping 55% cash out every time they change jobs.

Waiting periods, interruptions in company matches and tax consequences all exacerbate the damage done by cash-outs.

Loans-The 401(k) version of a Flexible Spending Account

Many employees believe that borrowing from their 401(k) makes sense. They figure, “I need money. Why not borrow from myself?” That’s sounds logical, but most investors don’t recognize the tax consequences of taking a 401(k) loan.

If they don’t pay it back, they’ll be hit with a 10% penalty, plus federal income taxes if they are under age 59 1/2 . Even when they pay the funds back, they face double taxation as repayment interest is derived from after-tax dollars. Those after-tax dollars will be taxed yet again on withdrawals during retirement.

This market has caused a spike in 401(k) loans. Making matters worse is the recent introduction of the worst savings idea ever: the 401(k) debit card. With this handy piece of plastic, the 401(k) loan becomes as easy as swiping a card at the local coffee shop. Unfortunately, users diminish their nest eggs and pay credit card interest to borrow their own money.

Investment dialysis: Investors shouldn’t go it alone

Back when employees relied on a pension plan, they counted on professional money managers to oversee their asset allocation. With pension plans now holding a minority stake in the American retirement landscape, who manages today’s retirement funds?

Without professional advice, investors are acting as their own chief financial officers. Studies confirm that 30% of all participants hold no equity. And given the investor flight to safety movement, the percentage has been increasing, up to 50% on average in 2008. Even before the economic downturn, 401(k) participants were confused about their investment choices, as some plans offer as few as 4 funds and some as many as 75 funds.

Education: Clients need a shot in the arm

Investors need and want a 401(k) education, but for the most part, they aren’t getting it. The general lack of client education creates one of the biggest opportunities for the advisor. We know that more than 50% of investors would be willing to pay a fee for advice on their 401(k), but they don’t want to rely on advice from a website or from a college kid on the phone, which is the solution offered by the record keeper. Investors want a face-to-face meeting with a professional financial planner.

Finding the right remedy for rollovers now and into retirement

Now more than ever, investors need your help in managing their individual 401(k) plans. Remember, 42% of rollovers happen during job changes. People tend to change jobs in a good economy and lose jobs in a bad economy. Both environments represent opportunities to capture rollovers. And while many retirements have been put on hold due to the current recession, experts in the retirement market estimate plan assets could swell to as much as $25 trillion by 2013.

As an advisor, you can prepare and prospect for rollover opportunities by becoming a “401(k) doctor” for individual investors desperately in need of professional advice and guidance. Even with all of the imperfections, most Americans are building their hopes, dreams and nest eggs by way of their 401(k)s. Advisors who seize the moment and help clients succeed will be rewarded for their efforts.

Dan Starishevsky is senior vice president of marketing at Jackson National Life Distributors LLC, Denver, Colo. You can e-mail him at daniel.starishevsky@jackson.com